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Care Or Cash? The Effect Of Child Care Subsidies On Student Performance

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Many countries have implemented childcare subsidies in an effort to help families; in the United States, the government created the Child Care and Development Fund in 1996, which provides public funds for childcare assistance to low-income families. Despite the importance of the issue, little is known about the effect of childcare subsidies on parent and child outcomes. Research in this area has been limited because of the difficulty identifying the causal effect of childcare price on later outcomes; for example, higher childcare prices may be associated with better childcare or wealthier parents, in which case one cannot isolate the effect of price alone on later child outcomes. This paper uses recent data and a novel source of identifying variation--sharp discontinuities in the price of childcare by income in Norway--to identify the effect of childcare subsidies on parental behavior and the later academic achievement of children. There are a number of papers that have examined the effect of childcare subsidies on female labor force participation, with the findings ranging from no effect to significant negative effects (See Blau, 2000, for a summary). More recently, work by Herbst and Tekin (2010b) has examined the effect of childcare subsidies in the United States on children’s academic performance.1 They use a unique identification strategy, applying distance to the nearest social service agency that administers the subsidy application process as an instrument for subsidy receipt. They find small negative effects of subsidy receipt the year before kindergarten on kindergarten performance, although these negative effects have generally disappeared by third grade.2 Our work complements this

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  • Black, Sandra E. & Devereux, Paul J. & Løken, Katrine V. & Salvanes, Kjell G., 2012. "Care Or Cash? The Effect Of Child Care Subsidies On Student Performance," Working Papers in Economics 09/12, University of Bergen, Department of Economics.
  • Handle: RePEc:hhs:bergec:2012_009
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    1. David M. Blau, 1999. "The Effect Of Income On Child Development," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 261-276, May.
    2. Tekin, Erdal, 2005. "Child care subsidy receipt, employment, and child care choices of single mothers," Economics Letters, Elsevier, vol. 89(1), pages 1-6, October.
    3. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers 1118, Princeton University, Department of Economics, Industrial Relations Section..
    4. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    5. David Blau, 2003. "Child Care Subsidy Programs," NBER Chapters,in: Means-Tested Transfer Programs in the United States, pages 443-516 National Bureau of Economic Research, Inc.
    6. Erdal Tekin, 2007. "Childcare Subsidies, Wages, and Employment of Single Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    7. Katrine V. Løken & Magne Mogstad & Matthew Wiswall, 2012. "What Linear Estimators Miss: The Effects of Family Income on Child Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 1-35, April.
    8. David Blau & Erdal Tekin, 2007. "The determinants and consequences of child care subsidies for single mothers in the USA," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 719-741, October.
    9. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 455-483, July.
    10. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    11. Berlinski, Samuel & Galiani, Sebastian & Manacorda, Marco, 2008. "Giving children a better start: Preschool attendance and school-age profiles," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1416-1440, June.
    12. Tarjei Havnes & Magne Mogstad, 2011. "No Child Left Behind: Subsidized Child Care and Children's Long-Run Outcomes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 97-129, May.
    13. Mogstad, Magne & Wiswall, Matthew, 2009. "How Much Should We Trust Linear Instrumental Variables Estimators? An Application to Family Size and Children's Education," IZA Discussion Papers 4562, Institute of Labor Economics (IZA).
    14. Milligan, Kevin & Stabile, Mark, 2007. "The integration of child tax credits and welfare: Evidence from the Canadian National Child Benefit program," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 305-326, February.
    15. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
    16. Løken, Katrine V., 2010. "Family income and children's education: Using the Norwegian oil boom as a natural experiment," Labour Economics, Elsevier, vol. 17(1), pages 118-129, January.
    17. Mogstad, Magne & Wiswall, Matthew, 2009. "How Much Should We Trust Linear Instrumental Variables Estimators? An Application to Family Size and Children's Education," IZA Discussion Papers 4562, Institute of Labor Economics (IZA).
    18. Jens Ludwig & Douglas L. Miller, 2007. "Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 159-208.
    19. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    20. Maria Donovan Fitzpatrick, 2010. "Preschoolers Enrolled and Mothers at Work? The Effects of Universal Prekindergarten," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 51-85, January.
    21. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 933-959.
    22. repec:oup:restud:v:79:y::i:3:p:933-959 is not listed on IDEAS
    23. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute of Labor Economics (IZA).
    24. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    25. Herbst, Chris M. & Tekin, Erdal, 2010. "The Impact of Child Care Subsidies on Child Well-Being: Evidence from Geographic Variation in the Distance to Social Service Agencies," IZA Discussion Papers 5102, Institute of Labor Economics (IZA).
    26. Shea, John, 2000. "Does parents' money matter?," Journal of Public Economics, Elsevier, vol. 77(2), pages 155-184, August.
    27. Dan Maurice Levy & Greg Duncan, 2000. "Using Sibling Samples to Assess the Effect of Childhood Family Income on Completed Schooling," JCPR Working Papers 168, Northwestern University/University of Chicago Joint Center for Poverty Research.
    28. Berlinski, Samuel & Galiani, Sebastian & Gertler, Paul, 2009. "The effect of pre-primary education on primary school performance," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 219-234, February.
    29. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
    30. Pål Schøne, 2004. "Labour supply effects of a cash-for-care subsidy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(4), pages 703-727, December.
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    Keywords

    Education; income subsidy; child care;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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